Scrubs maker Careismatic Brands is closing two distribution facilities in Dallas, laying off 404 employees in the process, according to a Worker Adjustment and Retraining Notification Act notice obtained by Supply Chain Dive.
Layoffs are scheduled to start on May 31, with terminations expected to continue afterwards, according to the March 28 letter. The closures are attributed to “changing business needs.”
“We are taking steps to enhance our distribution model to better meet our business' needs,” a spokesperson told Supply Chain Dive in an email. “In connection with this process, we have made the difficult decision to wind down operations at our distribution centers facilities.”
Careismatic, which sells to more than 2,000 wholesale customers including hospitals and Walmart, has faced growing competition in recent years, forcing the company to invest in direct-to-consumer services versus sales to physical retailers. The California-based company eventually filed for bankruptcy in January reportedly due to supply chain woes, including delays and the rising costs of materials, labor and fuel.
According to the bankruptcy filing, at least one of the Dallas facilities is larger than 1 million square feet.
As a result of the bankruptcy, Careismatic, which relies on more than 1,400 vendors, was asked to pay its critical suppliers and other vendors, according to the document. The document noted that the scrubs maker owes tens of millions of dollars to its suppliers, including Hong Kong-based Leopard Textiles Holding.
The healthcare sector has been struggling with higher interest rates, federal regulatory changes, labor shortages and more, leading to a slew of bankruptcies in 2023. Retail healthcare company Rite Aid, for instance, filed for Chapter 11 bankruptcy in October 2023, owing nearly $140 million to its suppliers.
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